twentieth century has been characterized by three developments of great political importance: the growth of democracy, the growth of corporate power, and the growth of corporate propaganda as a means of protecting corporate power against democracy.’17 The evidence to support Carey’s thesis is overwhelming. The grand scale and conscious intent of twentieth-century corporate propaganda is striking. Any account of modern democracy that excludes it is misleading and incomplete.
Towards the end of the nineteenth century, regulations on corporate mergers and acquisitions were relaxed, leading to a rapid concentration of capital in a small group of ‘super corporations’. From 1898 to 1904, almost 2,000 corporations were whittled down to just 157.18 By the end of the nineteenth century, they had been granted ‘corporate personhood’ by the courts, winning rights and freedoms that previously had only been possessed by living, breathing people. They were soon to be endowed with a personality. In 1916, following the example of company law in Britain, a US court ruling effectively made it illegal for a corporation to be motivated by anything but profit.19 To compromise this purpose for the sake of any other considerations – the environment, working conditions or the public interest – would be to act illegally. In 1933, Supreme Court Justice Louis Brandeis compared modern corporations to ‘Frankenstein monsters’.20 Given life by the state, they now threatened to overpower their creators.
Milton Friedman, one of the most influential economists of the twentieth century, defended the view that the corporation’s only moral obligation was to maximise corporate profits for stockholders. Executives who prioritised social and environmental goals over profits were, he declared, immoral. The only time such actions are permissible, claimed Friedman, is when they are insincere, that is, when appearing to prioritise the wider social good is merely a means to the end of profit-maximisation. Today, this view of the role of corporations is still supported by the legal framework of most industrialised nations. Legal scholar Joel Bakan explains that the law ‘compels executives to prioritize the interests of their companies and shareholders above all others and forbids them from being socially responsible – at least genuinely so’.21 ‘Corporate social responsibility’ is tolerated, then, only when it is in the financial interests of the shareholders. Structuring the law in this way only underscores the deeper logic of market competition, which drives competing firms to profit any way they can or perish.
Corporate employees may be decent individuals in their personal lives, but in their institutional roles they are compelled by the goals and priorities of their employer to maximise profit at all costs. This is generally well understood. Jan Kees Vis, Director of Sustainable Agriculture at the multinational corporation Unilever, conceded that the minute he ‘adopts a policy that benefits the environment but harms the company’ he will lose his job.22
A corporation can increase its profits in various ways. Some, such as technological innovation, can benefit us all. But there are many easier ways to increase profits that can, incidentally, cause grave damage: using resources without paying for them; manufacturing unhealthy wants through manipulative advertising; extracting subsidies, tax breaks and bail-outs from the state; and increasing demands on workers while dramatically reducing wages.
The two major threats to corporate profit are market competition and political democracy. No profit-maximising entity truly endorses free-market doctrine for the simple reason that competition harms profits. The corporate support of free enterprise is an opportunistic move – a struggle for power, not principle. Ideally, every corporation prefers to monopolise the market in which it operates and raise entry costs to prohibitive levels, thereby eliminating all competition. Often, this is what happens. Market competition produces winners and losers. Winners then use their gains to consolidate and expand their advantage. They benefit from economies of scale, synergy and larger budgets for advertising, research and political lobbying. Over time, small advantages become magnified and industries become less competitive. In fact, students in business schools are taught how to create barriers to competition in the pursuit of market dominance.
In order to protect citizens and the environment, governments can limit the ways in which businesses can make a profit. So, from the perspective of the corporation, the power of the state poses a persistent threat. Of particular concern is the state’s capacity to impose regulation and taxes that eat into profit margins.
But the real threat to profit is not the state (which can be an enormously powerful ally) but the existence of democracy, which can challenge corporate control of the state. Democracy enables people to regulate industry and use their votes to obtain what they cannot afford in the market – healthcare, social housing, education, energy and food – and, in doing so, cordon off parts of the economy from which business might otherwise profit. Consequently, strong incentives and ample means exist for corporations to restrain and control democracy. The goal is to co-opt state power and create an economic environment conducive to their own short-term financial interest. This would be an economy free from democratic interference with minimal regulation and taxation, no legal protection for workers, unions or the environment, coercive support from the state and a host of valuable subsidies.
During the nineteenth century, corporate power was effectively insulated from democratic interference. However, this began to change when, from 1880 to 1920, in Britain and the US, the right to vote was extended from roughly 10 per cent of the population to almost 50 per cent.23 Men and women from all walks of life were winning the formal right to rule themselves. Meanwhile, widening inequality and worsening poverty were forcing middle-class people to rethink ideological assumptions once widely accepted. Aggravating such conditions were the unaccountable heads of corporations dominating economic life who, writes Ewen, had taken on ‘the traits of the despots that eighteenth-century democrats had fought so vigorously to overthrow’.24
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